Comments of Angelyque P. Campbell, Southwest Office of Consumers Union (1) and the Texas Community Reinvestment Coalition (2) , presented at the Federal Reserve Bank of San Francisco, Public Hearing on the NationsBank and Bank of America Merger Application, San Francisco, California, July 9, 1998.

INTRODUCTION

Thank you for the opportunity to appear today. I am Angelyque P. Campbell. I am from the Texas office of Consumers Union and I represent the Texas Community Reinvestment Coalition. I come today on behalf of TCRC to discuss our concerns about the mergers impact on low income consumers and persons of color in Texas.

We believe our position in this merger is unique since NationsBank and Bank of America are two of our states largest financial institutionsNationsBank being the largest bank in Texas. If the merger is approved, the new bank will control an even larger share of the Texas market.

As the only statewide community reinvestment group in Texas, TCRCs interest is ensuring the credit needs of local communities in Texas are not ignored. Unfortunately, our most recent HMDA study, "Access to the Dream: Home Mortgage Lending in Texas," shows NationsBank and Bank of America have problems lending to low income communities and communities of color in Texas. If the merged bank is to lead the financial industry in community lending and investment as it asserts it will, then the Board should delay this merger for two reasons:

to address unresolved questions about the banks current performance, and

to require conditions prior to approval to assure that all communities credit needs are met.

Without a detailed plan, the $350 billion pledge is hollow. Also, based on the two banks performance in underserved communities in Texas. TCRC doubts the new banks ability to meet this pledge. The new bank needs to make firm, geographic-, race-, and income-specific commitments, and the regulators need to monitor and enforce those commitments in the following areas:

No Branch Closings in Low Income Communities and Communities of Color.

When Texas suffered from 40 percent of the nations bank failures in the 1980s, it was our low income neighborhoods who were affected most by bank closures. As banks moved out of the neighborhoods, higher-cost non-bank institutions moved in. It concerns our coalition that of the total number of NationsBank branch openings and closings that occurred in 1996, upper and middle income areas received 40 new branches, while low and moderate income areas only received 10.

Improved Lending Performance to Persons of Color

In Texas, African-American and Latino borrowers are two to three times as likely to be denied for a home loan by NationsBank than a White borrower. HMDA data also shows NationsBank disproportionately loaned 86% of their dollars for home loans to white borrowers. In some Texas cities, the disparity is worse:

In the Beaumont-Port Arthur MSAtwo majority African-American citiesNationsBank made only four loans to black families, and only one of them in a black census tract. Yet, NationsBank holds 9 percent of the deposits in the Beaumont-Port Arthur MSA.

In San Antonio, NationsBank holds 14.5 percent of all deposits in the city, while Bank of America controls another 5.5 percent. Yet, NationsBank made only 1.7 percent of San Antonios home loans.

In the Fort Worth-Arlington MSAanother majority African-American cityNationsBank made only two loans in a black census tract area, yet its depository share in the city is 15.1 percent.

Development of Desirable, Affordable Housing Products

The most recent HMDA data shows Bank of America disproportionately targets Texas low income consumers and persons of color with manufactured housing loans. The interest rates on these home loans ranged from 11.25 – 13.25 percent, substantially higher than the average 7 percent rate for 30-year conventional loans. Since Bank of Americas recent decision to sell its manufactured housing unit, Bank of America has not offered an alternative affordable housing plan which meets their community reinvestment obligation..

We watch these changes in the banking industry with deep anxiety for the effects the mergers will have on our communities. Loss of competition, higher fees, and the erosion of CRA come to mind. The single most important step that must be taken in the wake of bank mergers is to increase accountability of lenders to our communities unmet banking and credit needs. It is not only the right thing to do, it is the law. We trust the Board will do what is necessary to ensure banks remain in compliance with our fair housing and fair lending laws and accountable to all communities needs.

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(1) Consumers Union, publisher of Consumer Reports, is an independent, nonprofit organization established in 1936 to provide consumers with information and advice on goods, services, health, and personal finance. Consumers Union accepts no outside advertising nor is beholden to any commercial interest.

(2) Texas Community Reinvestment Coalition (TCRC) is a statewide association of housing advocates and community-based nonprofit groups. Since its inception in 1994, TCRC has worked to remove barriers to homeownership and community development which deprive low income consumers and communities of color across Texas equal access to capital and financial services. TCRC seeks to expand availability of investment, lending, and services to underserved communities in Texas through research, education, and action. TCRC receives administrative support from the Southwest Regional Office of Consumers Union.